May 2019 Regulation Update

PRA110 – Cash Flow Mismatch Form

This new regulatory template is included in the WIRES® release 5.4 that was issued earlier this month. In-house calculations have been incorporated. All details are available in the release notes made available with the software update. Clients that wish to use WIRES® to submit PRA110 will be required to purchase the appropriate licence key.

FSA047 and FSA048 will continue to be necessary submissions until withdrawn in January 2020.

 

Climate Change and Governance

Firms are required to provide a plan regarding how the financial risks from climate change will be included in an organisation’s governance. The plan must be submitted to the PRA by 15 October 2019.

The expected content should be provided by the PRA well ahead of that deadline. It is understood that the PRA is likely to require information on how a firm will integrate climate change into its reporting, risk management, disclosures as well as approach to related stress and scenario testing.

Whistlebrook understands that all banks and building societies are affected by this requirement.

The financial risks may be wide ranging and affect many aspects of business including LTVs, attitude to lending in prone locations, product pricing, costs, operational risk and strategy.

ICAAP and ILAAP may need to incorporate potential implications of financial impacts of climate change.

Further details are in PRA Consultation paper CP 23-18 and Policy Statement 11-19.

 

Modified Mortgage Affordability Assessment – FCA CP 19-14

It has been proposed that a modified mortgage affordability assessment be introduced to make it easier for borrowers to move to cheaper products elsewhere.

The relevant situation is where a borrower is up to date (over the last 12 months) with the loan payments, not seeking to increase borrowing, but wants to move to a different product that is less expensive. In this position, it may be impossible to transfer where the loan is now not with an active lender and there is a need for a full affordability test.

It is proposed that the move be made possible using a modified assessment.

Should this proposal be accepted, loans made under a modified assessment will be required to be distinguished on PSD001 and PSD007.

 

Funding Plan Template Changes

The EBA has proposed to make some changes to the templates used by firms that are required to submit funding plans. The main changes are:

  • Additional breakdown of total long term unsecured debt securities
  • Categories of assets and liabilities to be more aligned with FINREP
  • Introduction of a new template forecasting the statement of profit or loss

No change to the firms required to submit funding plans is proposed. Only the largest credit institutions that collectively make up at least 75% of the banking sector’s assets in the EU member country, are currently required to make submissions of the existing forms.

Further details are in EBA consultation paper 2019-02.

 

Payment Services Reporting

REP017

A revised template will become effective from 30 June 2019 and be available in WIRES®. This template takes account of the requirements published in EBA policy statement 18-24. For the period 1st January 2019 to 30th June 2019, data should be provided on a best efforts basis. As a minimum, the totals (volume and value) for Transactions and Fraud should be provided.

The information required in the updated version of the form is significantly greater than previously needed.

Complaints

Data on complaints about Authorised Push Payments (APP) fraud occurring from 1st  July 2019, are to be included in the PS Complaints form. Whistlebrook understands that APP is where a customer is misled into making a credit transfer to a fraudulent payee.